What's Your Problem? Why Entrepreneurs Always Need One

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Founder and CEO of Netflix Reed Hastings speaks during a keynote speech at the Mobile World Congress in Barcelona on February 27, 2017. Photo credit: LLUIS GENE/AFP/Getty Images

In 2009, when Netflix was still a DVD-by-mail service, the company’s co-founder Reed Hastings told Fortune Magazine how he came up with the idea. He had forgotten to return a movie to one of the video rental chain stores. Faced with a $40 fine, Hastings was inspired to rethink an entire business.

Except it’s not true. As theWashington Post reported five years later, Hastings and his co-founder, Marc Randolph were simply thinking of ways to be the “Amazon.com of something.” DVDs were about to explode in popularity and were cheap and easy to send by mail.

Hastings understood the power of a good story to sell his company’s vision and differentiate it from the competition. He even included details like naming the movie (Apollo 13) to enhance what Randolph called a “convenient fiction.”

The idea of an entrepreneur creating a successful business by solving a personal problem is persuasive. It makes it easier for people to identify with the problem and see the solution as something they need too. And it’s even better when the story is actually true.

Filling in the blanks with Spanx

When Sara Blakely was selling fax machines door-to-door in Florida, her company’s dress code required her to wear pantyhose. Uncomfortable in the heat and humidity, she tried cutting off the feet from her pantyhose. Her experiments led to a new type of hosiery design thatshe called Spanx.

Blakely tested various prototypes with her mother and friends and even wrote her own patent after buying a legal textbook from a local bookshop. Spanx now generates revenues of hundreds of millions of dollars each year and Blakely became the youngest self-made female billionaire in America.